Managerial Macroeconomics
ECO 5117
Fall 2011
(Module 1: 8/22/2011 through 9/21/2011)
Instructor:
Office:
Email:
Telephone:
Dr. Steve Green
Hankamer 359
Steve_Green@baylor.edu
254-710-4543 (office)
Office Hours:
TR 1:30-3:00pm
& by appointment
254-715-2846 (cell)
COURSE MATERIALS
Our task in this course is to examine macroeconomic theories, ideas, and concepts and explore their
implications for management practice. We have one credit hour to address content that is often
covered in two or more three-hour courses. To my knowledge, there is no textbook that is even
remotely consistent with this goal. As a result, most of the theoretical material in this course will be
provided in PowerPoint presentations. For background reading to help place our subject matter in
context, you may purchase and read the following book:
Ip, Greg. (2010). The Little Book of Economics: How the Economy Works in the Real
World. (Hoboken, NJ: John Wiley & Sons, Inc.)
This book is short and a rather easy read, and I think you will get more out of this course if you read it. I
will almost certainly add some readings relating to the current macroeconomic situation as the course
progresses.
I also suggest that you follow economic developments in the news. Standard sources for economic
news include the Wall Street Journal, The Economist, Business Week, Fortune, Financial Times, and
Forbes. Twitter feeds from the Economist, Financial Times, and the Wall Street Journal are especially
helpful.
BAYLOR UNIVERSITY HONOR SYSTEM
As a Baylor MBA student, you have affirmed your commitment to ethical and professional conduct by
agreeing in writing to the following:



Affirmation of Expectations of Professional and Academic Conduct
Guidelines for Citations and References
Constitution of the Baylor University Honor System
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You may access the Baylor University Honor Code at:
http://www.baylor.edu/honorcode/index.php?id=44060
If I suspect anyone in the class of violating the Honor Code, I will follow the procedures outlined in the
University policy. Note that the policy requires me to report any violation, and that information will go
into a student’s permanent record.
CLASS ATTENDANCE
Hankamer School of Business policy requires that to earn credit in a course the student must attend at
least 75% of all class meetings.
(http://www.baylor.edu/student_policies/index.php?id=22214)
Carrying one credit hour, this course has a total of nine (9) class meetings. 75% of 9 is 6.75. Thus you
must attend at least seven (7) of the nine meetings or you will, as directed by university policy,
automatically receive a course grade of “F.” The university policy also states that “[the] student bears
the responsibility for the effect which absences may have upon class participation, announced and
unannounced examinations, written assignments, reports, papers, and other means of evaluating
performance in a course.”
One of the nine class meetings will be devoted to an exam. Thus course content will be delivered in 8
meetings. If you miss the maximum allowable number of meetings (2), you will therefore miss one
fourth (25%) of content coverage. My hope and expectation is that you will make every effort to attend
all meetings rather than making the minimum effort necessary to “get by.” The latter attitude does not
bode well for your future success and may, as noted below, have implications for your course grade.
I also expect all students to arrive on time for the beginning of class. A late arrival to a class may be
counted as an absence from the class and thereby be subject to the University absenteeism policy.
PLAGIARISM
Students agree that by taking this course, all required papers, exams, class projects, or other
assignments submitted for credit may (upon direction of the course instructor) be submitted to
turnitin.com or similar third parties to review and evaluate for originality and intellectual integrity. A
description of the services, terms, and conditions of use, and privacy policy of turnitin.com is available
on its web site: http://www.turnitin.com. Students understand that all work submitted to turnitin.com
will be added to its database of papers. Students further understand that if the results of such a review
support an allegation of academic dishonesty, the course work in question as well as any supporting
materials may be submitted to the Honor Council for investigation and further action.
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MBA LEARNING GOALS
The learning goals for the MBA program are:
MBA1. To understand and apply theoretical knowledge in integrated fundamental areas of
accounting, economics, finance, information systems, marketing, operations management,
organization behavior, quantitative business analysis, and strategic management;
MBA2. To think critically, to solve problems effectively, and make decisions strategically across
functional areas;
MBA3. To work collaboratively with others in cross-functional teams, and to motivate, lead, and
mentor others;
MBA4. To articulate ideas and information effectively and persuasively in every business context.
MBA5. To apply core ethical values of integrity, accountability, and service in all circumstances.
COURSE DESCRIPTION AND OBJECTIVES
This course uses economic analysis to help you understand the national and international economic
environment in which firms operate. Upon successful completion of this course, you will:
1. Understand the determinants of long-run trends in production, prices, employment, and
international trade [MBA1];
2. Be able to determine the short-run and long-run macroeconomic effects of various types of
“shocks” (actual or prospective events in the “real world”) [MBA2];
3. Understand and describe how macroeconomic trends have influenced a particular firm and/or
industry in the last few decades [MBA1; MBA4]; and
4. Determine and explain the effects of specific kinds of macroeconomic “shocks” on a particular
firm or industry [MBA1; MBA4]
5. Understand how macroeconomic data may be presented in misleading ways to further a specific
agenda [MBA5]
COURSE REQUIREMENTS
Our typical class meeting will proceed as follows:


Begin with a 20-30 minute discussion of an assignment that was given at the end of the previous
class meeting.
Presentation by instructor of the day’s new material
At the end of the class meeting, you will be given an assignment that will be due at the beginning of the
next session. Specific requirements regarding the assignments are described below. In addition, you
will also complete a more detailed project that will be due near the end of the course schedule.
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Preparing for Class. In this class, the readings from the (optional) book provide background for the
material to be discussed in class. Very little (if any) in the book will be the direct subject of assignment
or exam questions. You will benefit most from the class meetings if you have read the assigned chapters
prior to the class meeting.
Daily Assignments. This course has a total of nine (9) meetings. There will be no daily assignment due
either at the first class meeting or at the last (9th) class meeting. Assignments will be due at meetings 2,
3, 4, 5, 6, 7, and 8. Thus you will have a total of seven (7) assignments. These assignments will each
have a total number of possible points. At the end of the semester, I will drop your lowest (in terms of
percentage of possible points) assignment grade. I will then compute your “Assignment Average” as the
percent of total possible points you have earned on the six assignments. Your daily assignment average
will count as 30% of your course grade. Course grade determination is discussed in detail below.
Project. For this assignment, I will ask you to choose a firm or industry for which you may obtain at least
thirty (30) years of data on variables of interest. Your task will be to prepare a memorandum in which
you describe how the variables of interest relate to related macroeconomic variables. I will provide
more detail on the project requirements early in the semester. This project will count 30% of your
course grade.
Exam. A comprehensive in-class exam over all material covered in this course will be administered on
the 9th class day (Wednesday, 9/21). The exam will consist of ten (10) questions – i.e., questions that
can normally be answered in one or two paragraphs. Each question will have a point value of 10, so the
maximum possible score on the exam will be 100. The daily assignments will sometimes include
questions like those you are likely to see on the exam. Your exam grade will count for 30% of your
overall grade.
Class Participation will count for 10% of your course grade. At the end of the course I will rate your
participation as either “good” (100 points out of a possible 100), adequate (80 points), poor (40 points)
or unacceptable (0 points). My rating will be based on the quality of your contribution to the overall
learning experience. Talking too much will have a negative effect on your grade, as will talking too little.
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GRADING SCALE
At the end of the semester I will compute your final average as follows:
Final Average = 0.3*Daily Assignment Average + 0.3*Project Grade + 0.3*Exam Score
+ 0.1*Class Participation Grade
Your course grade will be determined according to your final average (FA) as follows:
Grade
-------A
AB+
B
BC+
C
CD
F
Final Average (FA) Range
---------------------------FA > 93.0
90.0 < FA < 93.0
88.0 < FA < 90.0
83.0 < FA < 88.0
80.0 < FA < 83.0
78.0 < FA < 70.0
73.0 < FA < 78.0
70.0 < FA < 73.0
60.0 < FA < 70.0
FA < 60.0
The above grade cut-offs may be viewed as “worst case scenarios” for you, the student. If your final
average is 93.0 or above, you will receive a course grade of “A” regardless of any other factor (assuming
you are in compliance with the University policy on class attendance – if not, you will receive a grade of
“F” in the absence of extremely compelling circumstances).
If your average is slightly below a cutoff (92.8, for example), I may choose to give you the next higher
letter grade if in my judgment your overall performance in the course justifies doing so. Factors I will
take into account in making this determination include (i) whether your assignment work was
consistently of high quality – that is, consistently above the minimum required to receive a passing
grade, and (ii) the quality of your participation in class discussions. The decision as to whether I award
you a higher course grade than the one directly implied by your final average is entirely at my discretion.
DISCLAIMER
I hereby reserve the right to make changes in any part of this syllabus if in my judgment those changes
are warranted. In the event that I decide a change is necessary, I will post the revised syllabus on the
course Blackboard site along with an announcement explaining the rationale for the change.
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DAILY COURSE SCHEDULE
Meeting #1: Monday, August 22
 Macroeconomic Data and Information
o Ip, Chapter 1 (pp. 14-16)
o Ip, Chapters 4-5
Meeting #2: Wednesday, August 24
 Domestic Macro Analysis: Long-Term Trends
o Ip, Chapter 1, pp. 1-14
o Ip, Chapter 13
Meeting #3: Monday, August 29
 Domestic Macro Analysis: Short-Term Fluctuations
o Ip, Chapters 2, 8, 9, 12, 14, 15
Meeting #4: Wednesday, August 31
 International Macroeconomic Data and Information
LABOR DAY HOLIDAY: Monday, September 5
Meeting #5: Wednesday, September 7
 Basics of International Trade and Finance
o Ip, Chapters 6, 7, 11
Meeting #6: Monday, September 12
 International Macro Analysis
Meeting #7: Wednesday, September 14



Review of Theory
Following the Economy
o Ip, Chapters 3, 10
Selected Macro Topics of Special Interest to Managers
o Durability and Cyclicality
o Service Sector Cost Disease
Meeting #8: Monday, September 19
 Management Issues Raised by Domestic Macro Phenomena
 Management Issues Raised by International Macro Phenomena
Meeting #9: Wednesday, September 21
 EXAM